Sustainability-related disclosures for asset managers continue to evolve, with different countries and regions progressing at varying speeds. Whether it is the Task Force on Climate-related Financial Disclosures (TCFD), the Sustainable Finance Disclosure Regulation (SFDR), or climate risk reporting, understanding the roadmap and market expectations is crucial, as it is essential to effectively communicate metrics, actions, and results to key stakeholders and investors.

On May 30, 2024, S&P Global Market Intelligence hosted a webinar focused on sustainable reporting and its future. The speakers discussed various regulatory requirements and strategies for sustainable reporting and demonstrated how tools on S&P Capital IQ Pro, a powerful desktop platform, can aid in this process. This blog summarizes the key takeaways.

Speakers

• Chirag Patel, Business Development Manager, S&P Global Market Intelligence
• Daniel Kaye, Senior Sustainability Specialist, S&P Global Sustainable1
• Etienne Lemerle, Sustainability Specialist, S&P Global Market Intelligence

Agenda

The speakers covered the following topics:

• Introduction to sustainability and its regulations.
• Changing regulations and their impact on sustainability reporting.
• The importance of accurate data gathering and standardization.
• Demonstration of tools and solutions for sustainability reporting.

Key Takeaways:

Takeaway 1: The Changing Regulatory Landscape and the Need for Compliance

The webinar discussed the evolving landscape of sustainability reporting and the increasing significance of these reports in the investment and financial sectors. The panelists stressed the importance of staying informed and being proactive about changing regulations, particularly those in the European Union (EU).

Chirag Patel highlighted several recent regulatory changes, including the EU taxonomy and the Financial Conduct Authority's new sustainability disclosure rules. He also noted that, while the global ESG landscape remains varied, all regional regulators require clear and accurate disclosure to encourage transparency and discourage greenwashing.

Daniel Kaye elaborated on specific regulations and frameworks that are in place, including the SFDR, EU Taxonomy, Corporate Sustainability Reporting Directive (CSRD), and TCFD, emphasizing the importance of understanding the nuances of these regulations.

Takeaway 2: The Need for Accurate Data Gathering and Standardization in Sustainability Reporting

The webinar stressed the need for accurate data gathering and standardization in sustainability reporting. The panelists discussed the challenges of managing regulatory dates, prioritizing requirements, and understanding the use of disclosed versus estimated data within different regulations. This underscores the complexity and critical nature of data management in sustainability reporting.

The session was interactive, with polling questions to gauge participants readiness and concerns regarding sustainability reporting. According to one poll, the biggest sustainability regulation concern for 52% was how to accurately gather data, standardize it, and calculate it on a portfolio basis. Etienne Lemerle responded to this concern by discussing the Portfolio Analytics tool offered by S&P Global on its S&P Capital IQ Pro platform. This tool assists users with assessing their ESG performance, including understanding how their ESG performance compares to their portfolio benchmark, pinpointing ESG improvement opportunities, and uncovering company and sector-level contributions to their ESG performance.

Takeaway 3: Staying Proactive Amid Changing Sustainability Regulations

The webinar emphasized that investors and financial institutions need to stay informed about current requirements and take appropriate steps to comply. It also stressed the need to stay proactive throughout.

Etienne Lemerle discussed how the tools on S&P Capital IQ Pro can assist. For example, Portfolio Analytics includes reports, including those for TCFD and SFDR, which users can modify using a comprehensive data library of sustainability and environmental datasets. They can also run reports with up to 30 different portfolios against 30 different benchmarks, customizing the time period that is covered.

The discussion also included forward-looking strategies, emphasizing the need for financial institutions to direct capital towards sustainable investments and manage sustainability risks effectively. This strategic orientation is crucial for aligning with global sustainability goals.

Major Insights

• The global landscape for ESG compliance remains highly varied, with universal compliance not yet achievable.
• There are rapid changes in sustainability regulations globally, including new initiatives like the EU taxonomy and updates to the SFDR, highlighting the importance for firms to stay informed and adapt quickly.
• The European ESG Template (EET) has been designed to harmonize the different requirements across various sustainability reporting disclosures.
• There is a critical need for clear and accurate disclosure across ESG strategies and investment processes to ensure transparency and prevent greenwashing.

Key Quotes

• "SFDR, EU Taxonomy, and CSRD are shaping the framework within which both corporate and financial institutions operate, pushing for clearer and more accurate sustainability disclosures." Daniel Kaye

• "Preparing for the future of sustainable reporting is crucial as we navigate the evolving regulatory landscape." – Chirag Patel
• " Our tools, like S&P Capital IQ Pro, integrate various datasets for actionable intelligence, helping clients navigate the complexities of sustainability reporting." - Etienne Lemerle